Intellectual Property and Innovation: Driving Forces in Global Trade and Risk Management

Intellectual property (IP) plays a crucial role in our daily lives, often without us realizing it. From the design of a milk carton to the song streaming through your headphones and the medicine you take, IP represents the creations of the mind that have been brought to life. Protected by patents, copyrights, and trademarks, IP allows innovators to gain recognition and financial rewards for their work and helps minimise some of the international risks. By balancing the rights of creators with the broader public interest, the IP system fosters an environment that encourages creativity, innovation, and progress for the benefit of all.

To learn more about intellectual property (IP) and its crucial role in global trade and innovation, tune in to our midweek episode with Mariana González. In this engaging discussion, Mariana delves into the key aspects of IP and its impact on the pharmaceutical sector, highlighting the importance of IP provisions under the USMCA. Building on insights from our recent episodes on the USMCA (Episode 201 and Episode 203), she explores why these provisions matter and discusses Mexico’s role in meeting its compliance obligations. Don’t miss this in-depth conversation on a topic that’s reshaping global trade dynamics!

IP Rights and the USMCA: Balancing Innovation and Accessibility

Intellectual property rights (IPR) grant inventors control over their creations for a limited time, encouraging innovation. The USMCA, which replaced NAFTA, updated IPR rules to address modern challenges, particularly in patents, trade secrets, and regulatory protections. Chapter 20 of the agreement outlines these protections, balancing incentives for innovation with public access to essential products, such as medicines.

In the pharmaceutical sector, Mexico’s five-year exclusivity period for biologics has been contentious, as critics argue it may not adequately incentivize innovation. Meanwhile, the USMCA’s strengthened trade secret protections and simplified trademark enforcement aim to foster cross-border investments and support industries like biotechnology. Geographical indications (GIs) also receive protection to safeguard regional product reputations without creating unnecessary trade barriers.

Enforcement remains a critical issue. The U.S. Trade Representative has flagged Mexico for incomplete compliance, placing it on the “Watch List.” This raises concerns about trade disputes, deters investment, and threatens regional competitiveness. Ensuring full implementation of the USMCA’s IP provisions is vital to fostering innovation, attracting investment, and maintaining economic stability across North America.

Mexico and IP

Mexico’s Federal Law for the Protection of Industrial Property (FLPIP), introduced to align with USMCA standards, still falls short in key areas such as patent term adjustments, regulatory data protection, and the patent linkage system. For instance, compensation mechanisms for patent delays and protections for clinical data remain underdeveloped, creating uncertainty for pharmaceutical companies. Additionally, the patent linkage system lacks critical safeguards like effective notification procedures, exposing innovators to premature competition.

These gaps not only challenge Mexico’s compliance with the USMCA but also diminish its appeal for pharmaceutical investment. Weak IP protections reduce incentives for innovation and risk increased scrutiny from trading partners, particularly the U.S., during the 2026 review. These issues create uncertainties that could disrupt market access and deter business activity across North America.

Intellectual Property’s Importance in Global Trade

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), negotiated during the 1986-94 Uruguay Round, marked the first inclusion of intellectual property rules in the multilateral trading system. TRIPS plays a pivotal role in enabling trade in knowledge and creativity, resolving IP-related trade disputes, and allowing WTO members the flexibility to pursue domestic objectives. The agreement formally acknowledges the critical relationship between intellectual property and trade.

Since intellectual property rights are territorial and apply only within specific jurisdictions, companies aiming to trade internationally or sell online must craft a global strategy by identifying target markets, objectives, and resources. Although IP laws differ across countries, fostering innovation is a shared priority, leading to significant harmonization of frameworks. The Uruguay Round advanced this harmonization, and the TRIPS Agreement further seeks to reduce discrepancies in IP protection and enforcement globally. It establishes minimum standards that WTO members must provide for safeguarding the intellectual property of other member nations, promoting a unified approach to IP rights on a global scale.

Listen to our Episode on Intellectual Property and Innovation here!